How Do You Compare? The “Rich-Gay” Myth Revisited

The article, written by Quoctrung Bui, was based on a research paper issued by the Treasury Department that analyzed joint tax returns filed by same-sex couples in 2014. Bui claims the information allowed him to develop “the most accurate picture of same-sex marriages to date.”

Also the fact that not many people have tracked statistics on the LGBTQ community creates difficulties in identifying reality. On the federal level, most people reference the US Census, which has notoriously had problems getting accurate information.

The article features many interesting insights. Today I’ll focus on some of the important statistics and give my opinion on why you should pause in taking this information as truth for the broader community.

Why Does This Matter?

Before I get into the article itself, I first want to tackle the question of why this matters. I know some of you say that it doesn’t affect you personally whether the community as a whole is richer or poorer. And I tend to agree.

I’ve always argued that personal finance is just that – personal. But seeing how you compare to others in our community will help provide perspective when you’re developing your financial plan and dealing with the emotional baggage that we all have around money. The perspective can help ground you in your values and make your goals personal and realistic.

Additionally, knowing the strengths and weaknesses of our community can help us efficiently fight the systemic struggles that we face, as well as provide the proper focal point for actually moving forward.

Gays Are Rich!

At first glance, this article provides a lot of good news on the financial front for our community. Some of the standout statistics include:

In 2014, there were 183,280 same-sex marriages in America (roughly 1% of all marriages and half of same-sex marriages reported by the census).

Male same-sex couples had average earnings of $176,000, which was $52,000 more than married lesbians and $63,000 more than married straight couples.

Same-sex married men with children had gross income of $275,000, more than double the pre-tax income for heterosexual and same-sex female married couples with children.

Before you get too excited or depressed, Bui gives a few reasons why this data may be a bit skewed.

For one, as UMass-Amherst Economist Lee Badgett points out, the findings don’t quite logically makes sense. According to an April 2015 issue brief the White House Council of Economic Advisor’s, full-time working women earned 78% of what full-time working men earned. So while it makes sense that two men would earn more than a couple with two women, or a couple with one man and one women, it doesn’t explain how married lesbian couples earned more than heterosexual couples.

Bui goes on to show that geography also plays a role in the income discrepancy. Most same-sex couples live along the coasts and in urban areas, where wages tend to be higher. When comparing the same zip codes, in turns out that heterosexual couples actually earn more than same-sex female couples.

Child care also affects the statistics. The Treasury report found same-sex female couples were four times more likely to have children than same-sex male couples. Combine the tough career trade-offs of child rearing with already lower wages, you have a better explanation of why the gap between male and female same-sex couples is so large.

Lastly, the data is pretty scattered. At the end of 2014, 35 states and the District of Columbia allowed same-sex marriages. This lead to some couples crossing state lines to get married. And even though the federal government recognized their marriage, their state of residence didn’t. As such, most of those couples would still file Married Filing Separately because of the hassle in filing joint federal returns and separate state returns. (This would lower the Department of Treasury’s claim that 97.5% of married couples file jointly.)

What the Article Didn’t Tell You

I love all of the rich data in this article. And I’m glad Bui points out the problems with it. I also have a few other thoughts on what was left out.

First, married couples, in general, are likely a wealthier group. Given the average cost of the a wedding last year was $32,641, more than half of the median household income in 2015, those that get married are those that can afford to do so. Therefore, the income of this select group might not reflect true picture of the community as a whole.

Furthermore, this article may lead some to believe that the LGBTQ population is doing well financially, when in fact income discrepancies and job instability still exists. The 2016-2017 Prudential LGBT Financial Experience Survey points out that lesbian women earn less than heterosexual women, reporting an average annual salary of $45,606 vs. $51,461. In addition, gay men reported earning an average of $56,936, with heterosexual men earning $83,469. This wage discrepancy, on top of continued discrimination in the workplace, especially for the Transgender group, makes income instability a very prominent issue, despite how far we’ve come with marriage equality.

Lastly, we just don’t have enough data yet. Marriage equality is so new that obtaining a good group of data will take some time. Further, with the gay population being such a small percentage of the married population (1%), it’s not quite comparing apples to apples. I’m hoping that this Treasury study happens every year. I’m especially interested in how the Obergefell decision affects the 2015 data.

Don’t get me wrong, this type of information is important. But it’s just as important to keep in mind the limiting factors of the data, especially when applying it to your personal situation.

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Brian Thompson Financial LLC (“BTF”), is a Registered investment Adviser in the State of Illinois. Based in Chicago, BTF focuses specifically on serving the LGBTQ community locally and nationwide. Brian Thompson, JD, CFP® is a proud member of NAPFA, XY Planning Network and Pride Planners.